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Wednesday, June 29, 2011

The kids have gone back to school. According to the Department of Education, more than 22 million students trooped to public schools: 1.93 million for kindergarten; 14.25 million for elementary; 5.85 million for high school; and 205,000 for the alternative learning system.

The DepEd estimates that the country lacks 152,569 classrooms based on 1:45 classroom-to-student ratio. We estimate a backlog of around 220,000 classrooms if we follow the ideal 1:25 classroom-student ratio. Add to that the shortage of 135,847 comfort rooms. So what is DepEd going to do? It’s going to build 12,000 classrooms this year. That’s just 7.9 percent of the current demand for classrooms. Worse, construction has been stalled due to slow disbursement of infrastructure funds. DepEd should’ve taken advantage of the good construction weather in the 1st half of the year—it didn’t.
On top of that, the country needs 101,612 teachers, they’ll hire 15,000.

Reviewing the 2011 budget, it’s good to see that some P1.8 billion has been allocated for the purchase of 32.3 million textbooks, but there’s a delay in printing. Some won’t be delivered to schools until October—midway through the school year.

But credit goes to the government for setting aside P8.6 billion, an increase of 22.9 percent from P7 billion in 2010, for scholarship grants, training programs, and student loan programs under the Technical Education and Skills Development Authority, Commission on Higher Education, and Department of Science and Technology.

What I particularly like (being a man of science myself) is the increased allocation for the production of science and mathematics equipment, from P500 million in 2010 to P727.5 million this year. The P227.5 million increase will finance science and math infrastructure in schools. This will enable universities to produce more scientists, technologists, and teachers and make the Philippines more globally competitive in industry and manufacturing. A much needed initiative, but still short of desired levels.

Results of the 2010-2011 Global Competitiveness Report of the World Economic Forum showed, as so sadly often, the Philippines ranking poorly. Out of 138 nations surveyed, the Philippines ranked 99th in terms of primary education; 69th in educational system; 76th on Internet access and 112th in science and math. To put that in sharper context, in all indicators the country ranked behind ASEAN neighbors Singapore, Brunei, Malaysia, Indonesia, Thailand and Vietnam.

Worse, in 1999, the Philippines ranked 36th out of 38 nations in both math and science proficiency as assessed by the Trends in International Mathematics and Science Study (TIMSS). Four years later the country’s ranking remained dismal as it ranked 41st for Math and 42nd for Science out of 45 countries. In 2008 Filipino science high school students ranked last in an Advanced Mathematics exam conducted by TIMMS. The Filipinos scored 355 points, way below the international average of 500. Out of 100 primary school entrants, only 14 finish college.
Let me repeat what I’ve said so many times before—with little effect it seems (maybe I’m wasting my time).

The government should release pork barrel funds to senators and congressmen only for projects related to education. For reasons still unclear to me, President Aquino increased the pork barrel of lawmakers this year but none was specifically allotted for health and education projects.

There’s also an urgent need to hire more teachers and pay them well—and properly train them. Also, implementing a merit-based pay scheme should be considered.

As I’ve mentioned in previous columns, the Catholic Church should allow its churches to be used as classrooms during weekdays. It would be the most Christian thing to do. I am saddened by the Church’s seeming indifference to educating the children they insist on being born in unlimited numbers. They even charge (high) fees to attend the schools they do run. This is not the Christianity I learned in school.

Also needed is to strengthen the counterpart-funding program with local government units. This means that 50 percent of the cost of building classrooms will come from participating local governments, the balance will come from DepEd. Let’s hope that this results in the construction of more classrooms.

Finally, it’s essential that the implementation of the conditional cash transfer Program is strictly monitored to ensure proper implementation of the program. The CCT has an education component—a mother of a household-beneficiary must make sure that her children meet the required school attendance rate of at least 85 percent.

None of the above is hard to do, all of the above makes great sense. So when will it be done? Will it be done? Sadly I expect, I know the answer.

***

Shifting to renewable energy is a very good idea. Oil and coal are a limited, and pollutive resource. Gas too, to a lesser extent. So the shift makes sense on a worldwide basis.

For the Philippines, however, it does not. At least for some of it. Hydroelectric, geothermal and biomass, where the Philippines is already fairly well established, makes great sense. For solar, wind, waves etc, it makes no sense. These are early technologies still yet to be fully developed to be efficient and cheap.

The Philippines is a poor country with minimal effect on the world’s environment (less than 1 percent) so it makes no sense to move to more expensive power when Philippine electricity is already the highest cost in Asia, and its GDP/capita of $2,000, one of the lowest. As the Foundation for Economic Freedom so well says: “We believe that it is more prudent to wait, given advances in technology, until the cost of solar and wind power drops to parity with conventional sources, instead of subsidizing these rich solar and energy producers at the expense of Philippine industry and the Filipino consumer. It is the obligation of rich, developed countries which are major contributors to carbon emission to subsidize these renewable sources of energy, not of the Filipino consumers”

Consumers are already subsidizing the poor who get free electricity if they consume less than 100KWH/month, to ask them to also subsidize solar power at a cost of P17.95/kwh when they can get non-renewable power at P5/kwh is cruel.

Senator Osmeña is quite right when solar power falls to half the cost it is today, which it will, then is the time for the Philippine to consider shifting to it.

***

Don’t the Arroyos realize that everyone they object to immediately becomes a preferred choice. Are they so out of touch with reality that they don’t recognize they must be investigated for at least 16 (that I counted) scandals and unanswered incidents during Mrs. Gloria Arroyo’s term? An Ombudsman who will bring these to the forefront so they can prove their innocence, and put to rest all the suspicions, and accusations once and for all is just what’s needed.

The reason Mike Arroyo gives is that Ernesto Francisco has shown prejudice and bias against the Arroyos. But that’s exactly what you want from an Ombudsman: Suspicion and bias in favor of investigating—anybody. And there’s the key word: Investigating. An Ombudsman is not an impartial, uninvolved judge. That’s who the Ombudsman brings his suspicions and accusations to. It is a fair, impartial judge Mike should be insisting on. And should be granted.

Tuesday, June 28, 2011

The Department of Environment and Natural Resources (DENR) is partnering with local government units (LGUs) in the conduct of land titling in an effort to fast track the processing and issuance of land titles over inalienable and disposable lands.

DENR Secretary Ramon J. P. Paje said the move will also provide an opportunity for the LGUs to take an active role in the agency’s programs. “Local government units have critical role to play in the implementation of national programs and projects as provided by the Local Government Code, and one of these is land titling where their help is important particularly in resolving boundary conflicts,” Paje said.

Paje said the LGU-DENR partnership calls for the creation of a composite land adjudication team composed of at least one deputy public land inspector (DPLI) who will work under the supervision of the DENR land management officer (LMO) assigned to the LG. The team will help the DENR in the titling of alienable and disposable lands in cities and municipalities, according to Paje.

“The team is expected to function in its municipality of jurisdiction to assist in land adjudication, dispute resolution and other steps to facilitate and fast tract the land titling,” Paje said.

Under the DENR Administrative Order No. 2011-06 entitled “Prescribing the guidelines for the implementation of public land titling in partnership with local government units”, all the regional executive directors (REDs) of the DENR are authorized to deputize permanent LGU officials that may be assigned to the titling program as Deputy Public Land Inspectors (DPLI).

The order also provides the following procedures in the deputation of DPLIs: a) submission of list of nominees and their corresponding qualifications by the LGU to the RED through the community environment and natural resources officer (CENRO) and provincial environment and natural resources officer (PENRO); b) the CENRO and the PENRO to conduct their respectivetive review of the list of nominees and then submit their respective recommendations within 15 days; and c) upon submission of the list and recommendations to the RED, the RED in turn will authorize the conduct of necessary training related to DPLIs’ functions, mandates, authorities, duties and responsibilities.

Paje said that the responsibilities and authority of the DPLI only apply in their respective cities and municipalities of their jurisdiction.

Under the Order, the composite land adjudication team has the following roles to play in the titling procedure: liaise with, orient and mobilize the community to participate in the LGU titling program; coordinate with barangay officials of the area under the titling program; process applications by undertaking adjudication activities such as conduct interviews of land titling applicants, conduct of ocular inspection, evaluation of land claims and the pieces of evidence presented; assistance in the amicable resolution of disputes, among others.

The DENR also has the following roles: assignment of land management officers (LMOs) from the CENROs, PENROs or DENR regional office concerned to the LGU initiated titling program and the titling office created; provide all the necessary and pertinent land records, surveys maps and other pertinent data; provide technical assistance in the conduct of surveys, land adjudication, training and capacity building on public land administration and management; and provide general control and supervision over the LGU titling program where the DENR field offices shall maintain approval and signing authorities in all phases of the patent application and adjudication process.

The land information office created under the Order will be responsible for the provision of accurate and updated land information to support real property taxation, land transactions, resource management, development and conservation, zoning and land use, infrastructure, disaster management and business process and investments.

Friday, June 24, 2011

KORONADAL CITY (MindaNews/17 June) – Hundreds of beneficiaries have received ownership certificates in the largest distribution of land titles in Southwestern Mindanao this year under a government program spearheaded by the Department of Environment and Natural Resources (DENR).

Alfredo Pascual, regional DENR director, said that 650 land titles were issued to beneficiaries under Republic Act 10023 or the New Residential Free Patent.

Residential beneficiaries early this week received the titles to lands ranging from 166 to 750 square meters, and from to two five hectares for farm beneficiaries, the regional DENR office reported.

“Lands are essential to living and a valuable asset too, being one of the factors of production. Let us make our lands productive in order to uplift not only our living condition but also our economy,“ Pascual said in a statement.

He said the distributed land titles were located in Tantangan in South Cotabato, Matalam in North Cotabato, Esperanza and Palimbang in Sultan Kudarat, and Kiamba and Malungon in Sarangani.

There were also beneficiaries from the cities of Koronadal and General Santos, he added.

The distribution of land titles was in line with the Aquino government’s thrust to institute and hasten reforms in the land sector including the judicial processes in land titling, Pascual said.

South Cotabato Gov. Arthur Pingoy Jr. said the program makes dreams come true for beneficiaries to own residential and farm lands.

Under RA 10023, residential land owners can apply for a free patent with the DENR through the Community Environment and Natural Resources Office (CENRO)
which has jurisdiction over the residential lots.

In order to qualify, any Filipino who is an actual occupant of a residential land for 10 years may apply for a free patent title in all municipalities and cities provided that the land should not exceed 200 square meters in highly urbanized cities, 500 sq. m. in other cities, 750 sq. m. in first-class and second-class municipalities, and 1,000 sq. m. in third-class and other municipalities.

Former President Gloria Macapagal-Arroyo signed RA 10023 on March 9, 2010.

Tuesday, June 21, 2011

What’s wrong with Philippine society is that its economic system is primarily characterized by rent seeking. So, what’s rent seeking? It’s the non-market extraction of surplus or profit. It means the profit is generated from licenses, quotas, monopolies, protection, and other government granted privileges.

It differs from true capitalism where the profit or surplus is extracted from the market, usually through innovations in product or marketing and distribution. True capitalism is dynamic because it results in innovations and increases in consumer welfare. Society benefits as a result. In rent seeking, there’s no innovation, nor additional value to the consumer. Instead, there’s unearned extraction from the consumer. Welfare is diminished.

Rent seeking in the Philippines hasn’t stopped. It just takes new forms.

A vivid example of this is the Feed-in-Tariff (FIT) rate to be given to Renewable Energy Developers under the Renewable Energy Act. Under the proposal of the National Renewable Energy Board, all electricity consumers must pay an additional 12 centavos per kilowatt hour, amounting to 8 billion pesos per year, to subsidize Renewable Energy developers.

Why the need for a subsidy? Because the cost to produce energy by RE developers is much higher than conventional sources. The price for conventional sources (coal, natural gas, geothermal, big hydro) averages about P5 per kilowatt hour while the price to be paid for run of the river hydro is P6.15, biomass at P7.0, wind at P10.37 and solar at P17.95.

The difference between the price of conventional sources and the price to be paid for Renewable Energy must be made up by the FIT Rate, which is really a surcharge on consumers.

Some may ask: shouldn’t the Philippines do its share to halt carbon-induced global warming?

No, because the country’s contribution to carbon emissions is only less than 1% (.48%s). Hence, unlike the rich, developed countries, it has no moral or legal obligation to slow down global warming. Furthermore, the share of renewables in its energy mix is already 32%, much more than the 10% in the US and other countries.

But here’s the cake: Not only are we poor consumers being coerced to pay three times as much for solar energy and two times as much for wind, but in addition the developers are guaranteed a generous rate of return for the next 20 years! No risk on their part, even of technological obsolescence, because that risk has been passed on to us poor consumers who must pay the same FIT Rate for the next 20 years even if the cost to produce solar energy drops by 50%.

The guaranteed rate of return is not the only form of rent seeking. Under the proposal of the NREB, there will be no auction, whether among the different technologies (run-of-the-river hydro, biomass, wind, and solar) or among suppliers within a specific technology. Everything will be negotiated (wink, wink). No competition either on price or on time period (i.e., for a time frame less than 20 years) will be allowed.

Aside from that guaranteed rate of return and the no-sweat, no-competition policy, the developers will be enjoying a seven-year income tax holiday, duty-free importation, special realty tax rate, zero VAT on sales and purchases, cash incentives, 10% tax rate after income tax holiday, and so on.

The high-costing wind and solar energy producers are resisting a dispatch policy of cheapest first because they say that the country must have a "portfolio strategy." It’s a conceit to think that the government can ever place bets on a particular technology. Should the government have subsidized the pager industry? Or the typewriter industry? The only valid criterion is value for money or efficiency. The market, not NREB, must determine the winners.

Besides, solar and wind are unstable and unreliable sources of energy, dependent as they are on weather and other climatic conditions. They would be poor choices for a diversification strategy. They can never be energy sources for industrialization.

Also, why the rush? A policy of waiting when solar prices are expected to come down to grid parity in five years would better serve the power consumers, but the NERB wants to hand out contracts and lock in the profits of developers for the next 20 years now. We can only speculate why.

Rent seekers usually cloak themselves with noble aspirations to mask their predation. Since the 1950s, rent seekers have raised the lofty banner of nationalism in order to keep out competition and to mask their government granted monopolistic privileges.

Today, the new cloak is not nationalism but "environmentalism." But it’s the same old predation. Different color perhaps (green), but the same old predation.

What’s disturbing is that the manufacturing sector, already suffering from the highest power cost in Asia, will have to bear this burden in addition to the lifeline rate and other impositions. This is the road to perdition because societies collapse when the productive sectors of society are "taxed" to subsidize the inefficient, non-productive sectors.

The scourge of Philippine society is not corruption per se, but rent seeking. What the NREB proposal shows is that the scourge has not been eliminated. It’s just taking new forms. Pity us poor consumers. We can only say, "Please, moderate the greed."

Wednesday, June 1, 2011

Back in the old days when government really thought out our energy options, we also looked at renewable energy with a lot of interest. But we always had our feet on the ground. We knew just what we can reasonably expect from such RE as solar and wind. The RE resources we really focused on were geothermal and hydro.

Lately however, it became fashionable to tout solar and wind as if these so called alternative energy sources can be anything more than “nice to have.” While it is true that we have so much sun in our tropical country, the available technology to capture energy from all that sunshine and transform it to usable electricity is still rather inefficient. In other words, even as producing a watt of electricity from solar has gone down through the years, it is still way above the cost of producing that same watt from oil, coal or geothermal.

Indeed, solar is still a technology undergoing development. Eventually, it should be commercially viable or competitive with conventional energy. Right now, the only way to make it viable is to subsidize it. It is the same thing with wind. They call that subsidy feed-in-tariff (FiT), a fancy term for the amount they want to add to our electricity bills supposedly to encourage more use of this type of renewable energy.

Some local economists have raised an alarm about going overboard on this FiT in our mindless haste to be seen as fashionably earth loving. The manufacturers of solar and wind energy equipment have successfully lobbied Congress into passing a law that mandates the granting of this subsidy. It also mandates the inclusion of RE into our electricity mix.

Because our legislators were only after PR mileage to be seen as being ecologically correct, the law gave no regard to cost implications for our consumers and our industries.

Romy Bernardo, a Ramos era undersecretary of finance, is critical of the P9 billion annual cost of FiT (times 20 years or P180 billion). Of this, 50 per- cent goes to solar and wind, even if they will only account for 20 percent of the RE generated power under the FiT program. “Let’s decide what the public can afford,” Bernardo urges. “It certainly cannot be the P7 to P9 billion PER YEAR over a contract period of 20 years, given the already high cost of power.”

Bernardo is correct. Even the RE developers acknowledge that today’s RE prices are expected to come down. One executive working on the solar initiatives of a local conglomerate told their stockholders meeting just this week that it will take three to five years to reach grid parity based on global studies.

The solar industry is growing so fast, he said, and economies of scale are kicking in. “In the Philippines, projection is by 2015 to 2017, we should reach grid parity.” So why not wait? And why give them subsidy for 20 years when the technology is at grid parity in five? The initial price setting should only be made applicable for the next three or five years. After that, we should review again.

Even if we end up with less RE because we have been too cautious, it would be worse to err on the side of paying too much, locking in the mistake for 20 long years. We already have, in any case, at 34 percent, more RE capacity installed as a percentage of total electricity generated than the US and most European countries. We can afford to wait for the technologies to mature and come down in price.

The Foundation for Economic Freedom (FEF), a public advocacy group espousing market-oriented reform for good governance, has taken the position that “Renewable Energy subsidies must be transparent, limited and technology neutral.” The FEF believes the Feed-in-Tariffs to be issued by the Energy Regulatory Commission (ERC) must provide for an absolute peso cap on the total amount of subsidies that the public will be made to bear, capped both on an annual basis and for the life of the project.

The FEF also wants to make sure that the amount of public subsidy for RE projects should be explicitly disclosed and shown to be commensurate to the social benefit that the public is expected to derive from this program. The outlay should be transparently evaluated based on “value for money” to the public.

The FEF also urged the ERC to consider the ability of the public to shoulder additional levies on a per kWh cost of power. As FEF president Toti Chikiamco puts it, “it’s not only household consumers who will suffer but industry too. It will reduce the competitiveness of Philippine industry, already burdened with one of the highest power rates in the region and a strong peso.”

The FEF economists also think we should buy the cheapest RE available before we buy the more expensive technology. They point out that based on the numbers of the National Renewable Energy Board (NREB), it appears that we can subsidize 11 kwh of hydro for the same amount needed to subsidize 1 kwh of solar. The subsidy equivalent for biomass is 6 kwh for 1 kwh of solar.

Actually, even abroad, the economics of solar and wind are being questioned. In an article on MarketWatch, where I borrowed the headline for this column today, market trader Jim Chanos famed for shorting Enron, argues that wind and solar are “not capable” of real cost-effective ways of meeting energy demands. “Wind and solar are not efficient.”

This is not to say that technologies such as Solar Photo Voltaic have no place in our energy mix at this time. The FEF paper admits solar may be the best, or the only substitute, in some areas, for expensive diesel-fired plants serving off-grid customers.

When solar or wind are used to augment off-grid diesel installations, the avoided costs (or the cost of diesel fuel that would have been used) and the avoided emissions are higher, so the required incremental subsidy is less. And no additional reserves or transmission facilities that add to our power costs are needed. In fact, solar technology is already used in a significant number of rural electrification projects all over the country.

Instead of adopting the NREB recommendations, the FEF urges the ERC to set a universal FiT level only fractionally higher than current cost of power at for example, no more than 30 percent higher (vs. in excess of 300 percent premium for solar). ERB can then approve all projects meeting that hurdle, irrespective of technology.

FEF is calling upon the ERC to save our people tens of billions of pesos of needless higher electricity expense over the next 20 years. By doing this, it can also relieve pressure on electricity rates so that universal charges under the EPIRA can be promptly implemented, and thus provide our national treasury funding for needed social and infra spending – instead of giving our money away to foreign suppliers of immature and inefficient technologies.

Maria & Arnold

This came from Gilbert J.

Arnold Schwarzenegger had this little misunderstanding because English isn’t his native language. He told Maria that the housekeeper wants a raise. Maria said, “Screw her.”

Any simple-minded semi-literate Austrian could have made the same mistake.

About Me

FEF is a public advocacy organization dedicated to advancing the cause of economic and political liberty, good governance, secure and well-defined property rights, and market oriented reforms. It counts among its members former and present Cabinet secretaries and undersecretaries, leading figures in the academe, respected media personalities and opinion makers, and prominent members in the business and finance community.